Jobster lands $18 million for expansion

By JOHN COOK, P-I REPORTER

Published 10:00 pm, Tuesday, July 18, 2006

Seattle-based Jobster has landed an additional $18 million in venture capital that it will use to expand internationally and build out a new social networking site that connects job seekers with employers.

The financing -- led by the venture arm of Reed Elsevier, the London-based owner of LexisNexis, Harcourt Education and other businesses -- comes 11 months after Jobster pulled in $19 million from leading U.S. venture capital firms. Total financing in the 2-year-old company now stands at $48 million -- making it one of the most heavily funded consumer Internet startups in the country. According to Dow Jones VentureOne, only two consumer Internet companies have raised $48 million or more in the past three years.

Jobster Chief Executive Jason Goldberg says the company was not looking for new funds, with more than half of last year's financing still in the bank. But, he said, the opportunity to partner with Reed Elsevier made a lot of sense. In addition to LexisNexis and Harcourt, Reed Elsevier operates Totaljobs Group -- one of the largest job sites in the United Kingdom.

"They put together a proposal that they would not just invest money in us, but also would help us expand globally," said Goldberg. "In the end, we decided it was very attractive to take their money."

Reed Elsevier Ventures' Kevin Brown said Jobster has a strong management team and a more "compelling vision for next generation recruitment" than its competitors. Brown, who is joining the Jobster board, said Jobster could "become a very large company."

It is already on a pretty fast growth path, with more than 350 corporate customers using its online recruiting tools. Last month, the company posted more than $3 million in gross bookings, which contributed to a more than 50 percent increase in bookings for the second quarter. Customers include Starbucks, Google, Samsung, Philips and others. Goldberg declined to discuss specific revenue figures, although he said the company is targeting profitability for next year.

In September, the fast-growing company plans to move from its Pioneer Square digs to a new headquarters in the former Airborne Express building at 3131 Elliott Ave. Jobster employs 125 people, with room at the new 26,000-square-foot office space to accommodate 75 more.

Jobster is attacking the recruiting market in two ways. It operates a job search engine and social networking site that is free to consumers. And it sells online recruiting tools to corporations who are trying to find talented employees.

The financing from Reed Elsevier and existing investors comes as Jobster rolls out a new version of its consumer Web site, one that Goldberg said will help job seekers find great opportunities and corporations find star employees. Goldberg said the new site, in tests for several months, is really about "bringing people together" to share valuable workplace information.

Featured in The Wall Street Journal last week, the site allows current and former employees to discuss work environments by answering preset questions such as, "What is the interview process like at Expedia?" or, "What are the five lesser known perks at T-Mobile?"

Jobster is not an open forum at this time -- Goldberg said he wants to start by creating a more professional tone where people just don't "crap on their company." Yet, he admits that honest opinions will be important to the success of the site.

As of Tuesday afternoon, more than 2,400 people had answered questions about 360 companies. On the Microsoft page, one former employee writes that he misses the elaborate launch parties, while another provides advice on how to succeed at the software giant. Someone even touts the lack of a dress code, writing that you can even show up at work in your pajamas.

The Microsoft page includes job openings and eventually will include features to allow people to contact one another, Goldberg said.

The site also allows individuals to create tags, or categories, around certain subject areas. For example, a former Microsoft employee has tagged himself with words such as "developer," "Linux," "UW" and "SQL Server."

Goldberg said those tags can come in handy if an employer is looking for a specific type of worker.

"Lets say there are 5,000 people who tag themselves with sports marketing," he said. "I am going to sell that to Nike to be able to market jobs to them. It is a whole new way to find people for jobs, versus just putting them on a job board."

Jobster is not the only company trying to combine social networking and job boards. Mountain View, Calif.-based Simply Hired, backed with $17.7 million from Fox Interactive Media and Foundation Capital, recently inked a deal to power the job search engine on MySpace. Facebook, which is wildly popular with college students, also is reportedly expanding into the corporate realm.

With more than 85 million members, MySpace certainly has an advantage when it comes to pure numbers. And getting My Space members to use a new job service is a much easier proposition than building a new audience from scratch, said Greg Sterling, an Internet analyst at Sterling Market Intelligence.

"It is going to be harder for Jobster to do what it is suggesting than for MySpace, because MySpace has a huge audience that it immediately brings to these listings," Sterling said. "It is not to say that (Jobster) can't do it, it is just that it will be more challenging."

But Goldberg thinks there is room to create a professional social networking job site that is separate from what he calls the "Wild, Wild West of MySpace."

"I don't think employers are going to want to use SimplyHired as a way to find profiles on MySpace," he said. "I don't think they want to see teenagers doing beer bongs and stuff as part of their recruiting efforts. We are doing this very carefully, and we really believe in our model."

Sterling said it makes a lot of sense to try to create meaningful networks of people around workplaces. But, he said, most of the big social networking companies and job boards are moving in that direction.

"It is very challenging to get these things going, but if you can get them going and get them beyond a certain threshold or certain point, then they create their own momentum," he said. "But you have to create a kind of culture that yields real stuff -- real information. It is not just superficial, so there is real value to people participating."